FABM-Lesson-1-2 PDF

Preparing a Statement of Financial Position Current and Noncurrent Assets, Liabilities, and Equity in Account and Report Form Learning Objectives Identify the elements of SFP and describe each of them Prepare and SFP in report and account form with proper classification of items as cur...

Preparing a Statement of Financial Position Current and Noncurrent Assets, Liabilities, and Equity in Account and Report Form Learning Objectives Identify the elements of SFP and describe each of them Prepare and SFP in report and account form with proper classification of items as current and noncurrent List All that you own Everything you owe  Assets Liabilities Equity SFP income expenses Financial Statement SCI contributions distribution SCE cashflows SCF Financial statement is a structured representation of the financial position and financial performance of an entity used by a wide range of users in making economic decisions Asset It is a resource controlled by the entity from which future benefits are expected to flow to the entity Liability A present obligation of the entity whose settlement is expected to result in an outflow from the entity embodying economic benefits Equity It is the residual interest in the assets of the entity after deducting all its liabilities Accounting Equation Assets = Liabilities + Equity Balance Sheet Current and Noncurrent Assets = Current and Noncurrent Liabilities + Equity Sample Current Assets Noncurrent Assets Current Liabilities Noncurrent Liabilities Equity  Current vs Current Asset Noncurrent -asset held primarily for trading expected to be realized or intended Asset to be sold or consumed within its normal operating cycle usually twelve months after the reporting period Example: cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period  ACCOUNTS INVENTORIES PREPAID RECEIVABLE EXPENSES Examples MARKETABLE OFFICE AND EQUITY STORE SUPPLIES SECURITIES Noncurrent Asset -all other assets that are not current Examples Land Land Building Equipment improvements Intangible Investment Investment in Machineries assets property an associate Current -liability held primarily for the purpose of trading expected to Liability be settled in a normal operating cycle usually within twelve months after the reporting period and the entity does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period Examples Trade Short-term Salaries accounts notes payable payable payable Current Rent Utilities income tax payable payable payable Noncurrent Liability -all other liabilities that are not current Examples BONDS PAYABLE LONG-TERM NOTES PAYABLE Classify Noncurrent Current Liability Asset Current Noncurrent Liability Asset Salaries and wages payable Current Liability Property, plant, and equipment Noncurrent Asset Cash and cash equivalents Current Asset Bonds payable Noncurrent Liability Trade accounts payable Current liability Investment property Noncurrent Asset Office and store supplies Current Asset Account Form Report Form First Step: Classify Current Liability Noncurrent Liability Current Asset Current Liability Noncurrent Asset Noncurrent Asset Noncurrent Asset Noncurrent Asset Noncurrent Liability Current Asset Current Asset Noncurrent Asset Noncurrent Liability Equity Current Asset Noncurrent Asset Current Liability Current Liability Current Asset Second Step: Group up Current Liability Noncurrent Liability Current Asset Current Liability Noncurrent Asset Noncurrent Asset Noncurrent Asset Noncurrent Asset Noncurrent Liability Current Asset Current Asset Noncurrent Asset Noncurrent Liability Equity Current Asset Noncurrent Asset Current Liability Current Liability Current Asset Current Assets Section Second Step: Group up Current Liability Noncurrent Liability Current Asset Current Liability Noncurrent Asset Noncurrent Asset Noncurrent Asset Noncurrent Asset Noncurrent Liability Current Asset Current Asset Noncurrent Asset Noncurrent Liability Equity Current Asset Noncurrent Asset Current Liability Current Liability Current Asset Noncurrent Assets Section Third Step: Total Second Step: Group up Current Liability Noncurrent Liability Current Asset Current Liability Noncurrent Asset Noncurrent Asset Noncurrent Asset Noncurrent Asset Noncurrent Liability Current Asset Current Asset Noncurrent Asset Noncurrent Liability Equity Current Asset Noncurrent Asset Current Liability Current Liability Current Asset Current Liabilities Section First Step: Classify Current Liability Noncurrent Liability Current Asset Current Liability Noncurrent Asset Noncurrent Asset Noncurrent Asset Noncurrent Asset Noncurrent Liability Current Asset Current Asset Noncurrent Asset Noncurrent Liability Equity Current Asset Noncurrent Asset Current Liability Current Liability Current Asset Noncurrent Liabilities Section Third Step: Total Liabilities and Equity Section Report Form Report Form Report Form Report Form Account Form Your turn Assignment A company has current assets of Php4,350,000 and total liabilities of Php2,890,000. If capital is Php8,000,000, how much is the entity’s current assets? a. Php6,540,000 b. Php9,430,000 c. Php10,890,000 d. Insufficient information Assignment An entity has the following account balances at December 31: cash, P890,000; trade receivables, P450,000; trade payables, P300,000; land improvements, P700,000; short-term note payable, P100,000; investment in associate, P1,250,000; bonds payable P6,000,000. If the entity maintains P400,000 worth of inventories, at the end of every year, how much is the entity’s current assets?  An entity has the following account balances at December 31: cash, P890,000; Assignment trade receivables, P450,000; trade payables, P300,000; land improvements, P700,000; short-term note payable, P100,000; investment in associate, P1,250,000; bonds payable P6,000,000. If the entity maintains P400,000 worth of inventories, at the end of every year, how a.P1,340,000 much is the entity’s current assets? b.P1,740,000 c.P2,440,000 d.P2,540,000 References https://www.youtube.com/watch?v=l1PbKYpKj6g DIWA Senior High School Series Fundamentals of Accountancy, Business, and Management 2 Teacher’s Strategy Map Teaching Guide for Senior High School Fundamentals of Accountancy, Business, and Management 2 by Joselito G. Florendo et al